Rwanda: AfCFTA - What Next After Ratifications?

Photo: New Times
President Kagame with the President of Niger and Champion of the CFTA Process, Mahamadou Issoufou, and the Chairperson of the African Union Commission, Moussa Faki Mahamat, at the African Continental Free Trade Area Business Forum in Kigali (file photo).
analysis

The African Continental Free Trade Area Agreement (AfCFTA) could soon gather the minimum required ratifications to put it into effect.

So far, 19 countries have ratified the agreement with three more expected to ratify by mid this year, effectively gathering the 22 ratifications that are needed to make the agreement operational.

While this will not pave way for its immediate implementation, it will usher in another phase of negotiations among signatories on aspects of the agreement.

The negotiations will involve multiple and complex issues which could take months and will cover aspects such as rules of origin, procurement processes, services protocols and tariff negotiations among others.

Experts say that once the ratifications meet the required minimum, the AfCFTA secretariat will among other things have to prioritise negotiations to make way for implementation.

The target for the implementation is mid-2020.

Andrew Mold, the Acting Director of United Nations Economic Commission for Africa- Eastern Africa Sub-regional office said negotiations will lay out key aspects of implementation.

"The complexity of the negotiation process is that there is a lot to be discussed; the devil is in the detail. It is not simply merchandised trade, we are talking services protocol, government procurement process, competition. There is a lot to be discussed to make the single market work," Mold said in an interview.

Considering multiple parties (countries) to be involved in the negotiations, there have been concerns about the length of time of the process with most fearing that it could be a major setback to the process.

Mold says that the regional economic bloc approach would be more feasible as regional economic blocs can reach consensus faster than individual countries can.

"My suggestion is that we have regional economic communities take lead on negotiations as opposed to individual countries," he said.

Experts have said that the agreement should not be expected to solve all of the continent's problems and challenges in the onset but rather an approach to improvement of the state of affairs.

To make the most of the agreement, Mold said that it's time for countries to consider aspects that they have a competitive advantage in and those that could improve over time.

"The AfCFTA is not going to solve all problems that the continent faces in terms of economic development or social development. Member states will have to position themselves well in terms of continuing to provide finance for trade facilitation and identifying key sectors which economists call offensive interests which give you an advantage," he said.

Rather than be fearful of the competition when markets are liberalised, he said that countries ought to consider the impact of the agreement in terms of positioning the African market for global competition.

"Governments will need to identify sectors that have weaker but potential but could have difficulties of adjustment because of competition. More competitive environments will be a positive development and will position the continent better globally," he added.

Among the impacts of the agreement include a potential increase of intra-Africa trade consequently driving up production and value creation as well as less reliance on external imports.

"Only 20 per cent of all trade is intra-Africa. That means that 80 per cent is with outward which is not good. This is not ideal for an integrated region, we would like to see that double," he said, adding that they envisage a that percentage double to the region of about 40 or 45 per cent in about 10 or 15 years," he said.

Leonard Rugwabiza, the Economic Adviser at the Ministry of Finance, told The New Times that concerns such as infrastructure linkages to facilitate cross border trade would also be addressed with time once the agreement comes to place.

He said that the agreements such as single Africa Air Market would further facilitate the developments in the agreement.

As for Rwanda, the government is using the period prior to the implementation to facilitate local producers to become more competitive in aspects such as quality, cost of production among others.

Speaking at a post National Leadership Retreat press conference, Minister of Trade and Industry, Soraya Hakuziyaremye, said that among the interventions the government agreed upon during the retreat was to facilitate firms improve competitiveness in readiness for regional and international markets.

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